U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 15837 / August 11, 1998
SECURITIES AND EXCHANGE COMMISSION v. MICHAEL A. TODD, KIM J.
BROWN, JERRY L. AUBREY, GARY JASON MCCRORY, GARY L. CLEVERLY,
CALVIN J. CALVIN, AND TODD J. TAYLOR, Civil Action No. 98-6509 DT
(JGx)(C.D. Cal.)
The Securities and Exchange Commission announced today that it
filed an enforcement action in federal court in Los Angeles
against Michael A. Todd, Kim J. Brown, Jerry L. Aubrey, Gary
Jason McCrory, Gary L. Cleverly, Calvin J. Calvin, and Todd J.
Taylor. The Commission alleges fraud in the offer and sale of
stock issued by two companies, Casino Cruises Corp. and BRW
Leasing Services, Inc. The Commission asserts that the
defendants sold the stock through a fraudulent scheme based in
Newport Beach, California that promoted a fictitious cruise ship,
with gambling facilities, that would operate between Los Angeles,
San Diego and Ensenada, Mexico. Defendants, led by Michael A.
Todd and Kim J. Brown, raised $908,000 from 120 investors. The
complaint alleges that, contrary to the representations made to
investors, Todd and Brown took most of the investor funds for
themselves. They misappropriated approximately $313,000,
transferred $125,000 to an offshore account they controlled, and
paid approximately $101,000 in undisclosed sales commissions.
Todd and Brown also hid their own involvement in these
businesses, claiming that other, experienced individuals operated
the companies. They also falsely claimed that BRW Leasing shares
would be quoted on NASDAQ. The complaint further alleges that the
remaining defendants acted as sales agents for an unregistered
broker-dealer that solicited investors for the stock. The
Commission filed this action in connection with the Federal Trade
Commission's "Risky Business" initiative against fraud in the
entertainment industry.
The Commission seeks permanent injunctions, disgorgement and
civil penalties from Todd and Brown, and permanent injunctions
and civil penalties from the other defendants. The action
against Todd and Brown is based upon violations of Section 17(a)
of the Securities Act of 1933, Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5. The action against the
other defendants is based upon violations of Section 15(a) of the
Exchange Act.